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Star Industries owns and operates landfills for several municipalities throughout the Midwestern part of the U . S . Star typically contracts with the municipality
Star Industries owns and operates landfills for several municipalities throughout the Midwestern part of the US Star typically contracts with the municipality to provide landfill services for a period of years. The firm then constructs a lined landfillrequired by federal law that has capacity for five years. The $ million expenditure required to construct the new landfill results in negative cash flows at the end of years and This change in sign on the stream of cash flows over theyear contract period introduces the potential for multiple IRRs, so Star's management has decided to use the MIRR to evaluate new landfill investment contracts. The annual cash inflows to Star begin in year and extend through year are estimated to equal $ millionthis does not reflect the cost of constructing the landfills every five years Star uses a discount rate to evaluate its new projects, so it plans to discount all the construction costs every five years back to year using this rate before calculating the MIRR.
aWhat are the project's NPV IRR, and MIRR?
bIs this a good investment opportunity for Star Industries? Why or why not?
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